Wednesday November 4, 08:31 AM

INTERVIEW - Cognizant growing faster than rivals: CEO

By S. John Tilak

BANGALORE (Reuters) - Cognizant Technology Solutions Corp's strong showing in the third quarter indicates that it is gaining market share from both Indian software services exporters and global multinationals, a top executive said.

The IT services provider competes with India-based companies like Tata Consultancy (TCS.NS : 670.45 -17.45), Infosys Technologies (INFOSYS.BO : 2328.3 -58.55) and Wipro (WIPRO.NS : 622.6 -6.7), as well as technology giants like Accenture, Hewlett-Packard and IBM.

"We're growing significantly faster than much of the industry," Chief Executive Francisco D'Souza said in an interview with Reuters. "Clearly that indicates that we're taking share away from competition."

"We grew more than twice as fast as the average of the top four Indian companies on a sequential basis."

On Tuesday, Cognizant reported robust third-quarter results and boosted its full-year outlook, suggesting strength at its mainstay financial services business and a recovery in technology offshoring.

The company recorded a 10 percent sequential growth in revenue. The sequential revenue increase of $76.9 million was the largest in its history.

Cognizant has been seeing a stabilization of demand, but has decided to take a watchful route with its outlook, said the 40-year old CEO, who joined Cognizant when it was founded in 1994.

"We have taken a justifiably cautious approach in providing our guidance for the fourth quarter and the full year because we also think, as we go through the 2010 budget cycle, that demand will slacken a little bit," he said.

IT budgets for 2010 will be less volatile than 2009, D'Souza said.

"The budget cycle will probably be a little bit more prolonged than it has been in the past and perhaps not as bad as it was in the 2009 budget year," he said. "We won't see significant swings.

For 2010, the company expects margins to be in-line with its long-term operating margin target.

"We're going to continue to take the extra dollars and invest and our target operating margin remains unchanged at 19-20 percent," Chief Financial Officer Gordon Coburn said.

In the third quarter, Cognizant reported operating margins of 20.2 percent, excluding items.

Cognizant shares were up 7 percent at $41.41 Tuesday on Nasdaq.

(Editing by Aradhana Aravindan

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